Apple Valley residents favor AVRWC takeover (August 28, 2014)

APPLE VALLEY — Voting ratepayers served by Apple Valley Ranchos Water Co. favor a takeover by the town based on dissatisfaction with rising rates and problems with service, according to survey results revealed this week.

The survey was conducted in July and earlier this month by True North Research Inc., polling 400 Ranchos customers. The results were presented during a special meeting of the Town Council on Wednesday.

Satisfaction with the water system rated lowest among six services available in town, the survey indicated.

Support for the town’s acquisition of the private water system ranged from solid at 55 percent to as high as 75 percent, depending on what point in the survey the question was asked, said Timothy McLarney, president of the Encinitas-based firm. The survey has a margin of error of 4.86 percent.

I’d say you have an excellent chance of being successful if acquisition were approached by a ballot question or through the exercise of eminent domain, McLarney said. However, he advised town officials to effectively communicate their reasons for desiring a takeover.

This confirms what we hear from our citizens, Mayor Art Bishop said in a statement. We owe it to them to explore the options available to us to try to provide relief to the continuous cycle of rate increases.

In the latest three-year rate cycle, Apple Valley Ranchos has requested from the California Public Utilities Commission a 30-percent price hike for water supplied to residents.

AVR General Manager Tony Penna said in a public comment preceding the presentation that his company believes the survey was designed to mislead and wished it had polled water users throughout the town — not just AVR customers — because taxpayers funded it.

Officials from Park Water, which owns AVR, and Golden State Water have said in interviews and presentations that they don’t believe ratepayers will benefit from a shift to publicly owned water systems. They say municipalities pay more than expected to acquire private water companies and the true cost to consumers will be absorbed by taxpayer subsidies.

The Town Council has been exploring the possibility of acquiring the AVR water system from Park Water Co. for months, if not years, based on their concern that they cannot control rising rates.

The town has been consulting with the city of Missoula, Montana on how to approach the acquisition — Missoula is trying to obtain Mountain Water Co., another Park Water-owned system, by condemnation.

Apple Valley is accepting proposals for appraisal services to value Apple Valley Ranchos, with a bid award expected to be made in mid- to late September.

Additionally, the State Auditor will survey comparison water rates for Apple Valley Ranchos, the system owned by Golden State Water Co. also serving parts of Apple Valley, and the city water departments of Hesperia and Victorville. The completion date of that audit is uncertain but it should take months to perform.

Denise Kruger, Golden State Water’s senior vice president of regulated utilities, said in an interview earlier this month water prices are rising due to much higher replacement costs than in the past for aging pipelines and a lack of supply to meet demand, especially in the drought.

Our water supply is expensive, she said.

At Wednesday’s meeting, Penna said AVR will protect its right to operate as a business in the community.

Apple Valley Ranchos Water Company is not for sale, he said.

AVR is owned by Park Water Co. under Western Water Holdings LLC, a wholly-owned indirect subsidiary of Carlyle Infrastructure Partners, a division of The Carlyle Group. Penna and Park Water Co. CEO Christopher Schilling said earlier this month that Park Water and its subsidiaries are being offered for sale only as a whole package.

Source: Gary Brodeur, Daily Press